A majority of Australian Not for Profit board directors do not have the financial literacy skills to meet the changing challenges of the future, including the impact of new funding models, according to the findings of the Grant Thornton Financial Literacy Survey and published in the Pro Bono Australia monthly board report.
The Financial Literacy Survey, a collaboration between Grant Thornton and Pro Bono Australia, set out to understand the state of play in the Not For Profit sector in terms of the impact of new funding models and the ability of senior managers and Board Directors to deal with emerging financial issues and future sustainability. The survey found that only 59% of Not For Profit board members feel their board has the right level of financial literacy skills to meet the needs of their organisation today and even less, 40%, believe they have the skills to handle the financial challenges in the future. The findings of the survey reveal that across all skills, there is room for Not For Profit boards to improve and, when asked to rate the strength of each board’s skill level, participants only assessed their strength as ‘moderate’. “The reality is that the changes underway won’t be reversed and the challenge will be how organisations bridge this gap,” the national Head of the Not For Profit Industry Group at Grant Thornton, Simon Hancox said. Some 1065 respondents from small, medium and large organisations provided feedback for the survey.
“The results of the survey clearly indicate that there is a need to improve the financial literacy of Not For Profit boards, particularly to deal with the challenges of the future. This raises questions such as, ‘Who is responsible?’ and ‘How can it be done?’ Survey respondents gave clear responses to what they thought,” Hancox said. “When the question was posed ‘Who is responsible for ensuring financial literacy?’, 71% believed the responsibility rested with the individual board member and with the support of the organisation. “The answer to the second question, ‘How can it be done?’ didn’t come from a direct response to a question but rather from an analysis of the results from a series of questions on director education. That analysis showed that where there was a focus on director education the level of financial literacy was assessed as being higher. “Of concern is that the survey showed only a small percentage of organisations focused on financial literacy education for their Directors. For Director induction, while 75% of respondents said their organisation had such a program, only 36% said that it included financial training,” Hancox said.